Weekly outlook: SJP, Quilter and Brewin Dolphin report; First Fed meeting of 2022

The key events for UK wealth managers for the week starting 24 January


Monday 24 January

-Trading statement from Computacenter

-Flash purchasing managers indices (PMIs) from Asia, Europe and UK

-In Europe, quarterly results from Philips

-In the US, quarterly results from IBM and Halliburton

Tuesday 25 January

-Trading update from TI Fluid Systems

-UK government borrowing figures

-German Ifo economic sentiment survey

-Belgian Courbe Synthetique economic sentiment survey

-US Case-Shiller house price index

-US Conference Board consumer confidence reading

-In the US, quarterly results from Johnson & Johnson, Verizon, Texas Instruments, American Express, General Electric, Lockheed Martin and 3M

Microsoft Q2 trading update

Hargreaves Lansdown equity analyst Sophie Lund-Yates said expectations are high for the tech giant’s next set of results. Its first quarter results surpassed expectations, with revenue rising 20% to $45.3bn and group operating profit up 24% at $20.2bn. The company has also hinted it might be a beneficiary of rising inflation, as other businesses flock to its software and cloud-computing products to offset rising costs.

“We should also get some insight into how it plans to further expand its metaverse, following news of the impending almost $70bn acquisition of Call of Duty maker, Activision Blizzard,” Lund-Yates added.

-In Asia, quarterly results from UMC

-In Europe, quarterly results from Logitech, Atlas Copco and LM Ericsson

Wednesday 26 January

-Trading updates from Sage, Fresnillo and Pets at Home

Brewin Dolphin Q1 update

Brewin Dolphin closed out last year with 20% higher funds under management at £56.9bn, thanks to strong investment performance which added £7.1bn to the total. The DFM took in its highest gross discretionary fund flows on record of £4.1bn. In particular, it benefited from small IFAs outsourcing client portfolios, which accounted for £1bn of net flows into its MPS and Voyager ranges.

Quilter Q4 update

In its last trading update, Quilter unveiled plans to restructure its business into high net worth and affluent segments in a bid to drive growth. Shares in the wealth group are trading at 150p, not much higher than they were when the company floated on the London Stock Exchange in 2018.

However, Citi currently rates the wealth firm as a ‘buy’. “Quilter is our top pick in UK wealth; we like the self-story, both in terms of flow recovery and operating leverage thanks to strong cost takeout, as well as attractive capital return (17% yield in 2022E),” it said in an analyst note.

-Bank of Canada interest rate decision

-Federal Reserve monetary policy decision

AJ Bell investment director Russ Mould and financial analyst Danni Hewson note the market is only pencilling in a 6% chance of a rate rise at the Federal Open Market Committee’s first meeting in 2022 but this jumps to 97% in March, with a 5% chance of a half-point raise rather than the customary one-quarter. The consensus view is that by the final meeting on 14 December, there will have been four 0.25% hikes, taking the headline rate to 1.25%.

However, this would still mean rates are historically low at a time when real US interest rates are at their lowest ever level and the Fed’s $8.9trn balance sheet “has never been bigger,” they added.

“Monetary policy is still very, very loose, especially with the US economy forecast to grow at more than 5% in 2022, with unemployment at 3.9% and inflation at 7%. The Fed’s view is that the rate of inflation will cool a little of its own accord in 2022, but the last time inflation in the US stood at 7%, in 1982, US interest rates stood at 14%.”

The Fed’s attempts to tighten policy post-global financial crisis have not gone down well, 2013’s taper tantrum being the most obvious example. But in 2019 it also made a U-turn on raising rates and shrinking its balance sheet after signs the economy was starting to slow.

“That suggests the Fed might not get too far before something happens, especially as there is much more debt in the financial and economic system now than there was even just two-and-a-half years ago, although there remains the possibility that inflation simply forces its hand,” Mould and Hewson said.

-US oil inventories

-In the US, quarterly results from Tesla, Intel, AT&T, Boeing, LAM Research, Freeport-McMoRan, Kimberly-Clark, Xilinx, United Rentals and Levi Strauss

Thursday 27 January

-First-half results from Diageo

The global drinks giant, which owns the Johnnie Walker, Captain Morgan and Smirnoff brands, has seen its shares climb 30% in the last year, buoyed by the vaccine-led economic recovery and Covid restrictions lifting.

However, Hargreaves Lansdown equity analyst Matt Britzman notes management warned of near-term volatility in its previous full-year results due to inflationary pressures pushing costs up.

“We’ll be looking out for any impact on operating margins,” he said. “Following periods of hefty restrictions, the return of customers to bars and restaurants should be positive for the on-trade sales numbers. Although, in light of Omicron developments, it’ll be interesting to see how much of an impact this has had on recovery.”

Analysts will also be assessing organic growth (with first-half sales currently expected to hit £7.7bn), pre-tax profits (pencilled in at £2.4bn), and dividend growth, Mould and Hewson said.

-First-half results from Rank

-Trading updates from 3i, Dr Martens, Polymetal, Britvic and CVS

St James’s Place Q4 new business update

Citi pegged SJP as one of the UK wealth firms that should see the strongest revenue growth in 2022, with analysts forecasting a 12% year-on-year increase.

“In UK wealth, we note that companies with large proprietary distribution models, namely SJP and Quilter, have shown an ability to outgrow the market supported by unique advisor propositions and we expect this outperformance to continue,” it said in an analyst note.

In Q3 the UK’s largest wealth manager was closing in on £150bn in funds under management after taking in net flows of £2.6bn.

-UK Nationwide house price survey

-US Q4 GDP estimate

-US durable goods orders

-US weekly unemployment claims

-US pending house sales

-In Asia, quarterly results from Samsung Electronics

-In Europe, quarterly results from SAP, STMicroelectronics, Unicredit and Deutsche Bank

-Full-year results from LVMH

-In the US, quarterly results from Apple, Visa, Mastercard, Comcast, McDonald’s, Starbucks, Ford, Mondelez, Altria, KLA-Tencor and Southwest Airlines

Friday 28 January

-First-half results from ITM Power

-Japanese inflation figures

-German inflation figures

-US Personal Consumption Expenditures (PCE) index

-In Asia, quarterly results from SK Hynix

-In Europe, quarterly results from Volvo and H&M

-In the US, quarterly results from Chevron, Caterpillar and ConocoPhillips

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